What Is the Expected Return of a Zero-Beta Security

question 25

Multiple Choice

What is the expected return of a zero-beta security?

• A) The market rate of return
• B) Zero rate of return
• C) A negative rate of return
• D) The risk-free rate

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Definitions:

Unit Product Cost

The total cost assigned to a single unit of product, encompassing direct materials, direct labor, and manufacturing overhead.

Variable Costing

A costing method that includes only variable manufacturing costs—direct materials, direct labor, and variable manufacturing overhead—in product costs.

Production Cost

The total expense incurred in manufacturing goods, including materials, labor, and overhead costs.

Variable Overhead

The costs that fluctuate with the level of production or business activity, such as utilities or materials.